'Proper' company tax cut needed

Liberal Senator Arthur Sinodinos joins The Business to discuss the Government's proposed company tax cut, economic credentials and a second airport for Sydney.

Transcript

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TICKY FULLERTON, PRESENTER: I'm joined in the studio now by Liberal senator Arthur Sinodinos. He's a former investment banker with Goldman Sachs JBWere, and a former economic adviser and then chief of staff to John Howard, and he's now also president of the Liberal Party in NSW. Senator, welcome.

ARTHUR SINODINOS, LIBERAL SENATOR: Thanks, Ticky, great to be with you.

TICKY FULLERTON: Now, the best hope for a business tax cut is under a Labor government? Is that right? Will business have to wait a long time under a Coalition government?

ARTHUR SINODINOS: If the election were tomorrow, there'd be a Coalition government, and then before the election we would have laid out our plans around tax. I think what's happening here is that Wayne Swan is having a bit of a lend of the business community, particularly the small business community. The tax cut he was talking about of 1 per cent would not have been extended to all small business, only those who are incorporated, and it's only a small proportion that are. So, in terms of the engine room of the economy, small business, they actually weren't getting very much out of this particular tax cut - and for consistency's sake, the Coalition have made it clear, because we oppose the mining tax in the form that the Government had implemented, we opposed also a number of the measures that were associated with it. I think we need a proper tax cut. What Tony Abbott, Joe Hockey, Andrew Robb are talking about is a tax cut funded by lower spending.

TICKY FULLERTON: The question remains though, of course, how are you going to fund a tax cut like that? Indeed, how are you going to fund a lot of things?

ARTHUR SINODINOS: Well, that's a good question, and what Joe Hockey and Tony Abbott are saying is that we'll lay out a full economic program before the election so people have an opportunity to compare our plan of action for the economy with the Government's, and that will also include laying out spending cuts to pay for our promises. Can I also say that I think it's important to get away from this idea that cutting government spending is somehow a bad thing: sometimes people say, "You shouldn't review government spending from time to time." I cheer every time government spending is reviewed - not just because we want to cut it for its own sake, but every so often we have to go back and look at the efficiency of government spending, and one of our initiatives is that commission we've ordered after the election is to take a look at government spending. My fear about the Government is that because of the desperation to get a surplus next year, they've hacked in a way which is potentially counterproductive to investment and our long-term future, including our security future on defence. I think we need a proper look at all...

TICKY FULLERTON: Defence was a passion of yours, I know, but the latest Newspoll suggests a bounce from the budget for Labor - and no doubt partly due to the cash splash. You left John Howard just before his major cash splash, and that was also in order to hang on to government, was it not?

ARTHUR SINODINOS: Look, I don't know that there was a major cash splash. There were tax cuts in the 2007 election based on what was the prospect of a very large surplus, and when Howard left government he and Costello left the Government with a pretty big surplus and a future fund. So I think you can cut tax, you can have...

TICKY FULLERTON: So a surplus justifies that sort of cash handout? That's the difference.

ARTHUR SINODINOS: With cash handouts... you know, the connotation is somehow you're just throwing money around. It depends on if they're targeted or not. We try to have targeted family payments to give people choice about whether one partner stays at home or goes into the work force. There's nothing wrong with spending money in a targeted way, but it's got to be according to some plan or criteria.

TICKY FULLERTON: But this is the big debate. It's a debate about fiscal responsibility, and I guess it's OK to have very few policies 18 months out - at one level one can understand that. But the big battle now is for the economic mantle, and in the days of Howard and Costello, when you were there as chief of staff, it was unquestionable that the economic mantle rested with the Coalition. Now, that's not the case at all. I mean that must make you, you know, in great pain really?

ARTHUR SINODINOS: Well, I'm actually travelling pretty well because the latest survey suggests the Coalition's economic credentials are pretty well intact. I think what's happened since 2007 is, we went into opposition with pretty good economic credentials. We bequeath the Government a pretty good economy and a pretty good budget position.

TICKY FULLERTON: I'm looking at Wayne Swan being Euromoney's Treasurer of the Year. On your side, you've got your last great treasurer accusing Tony Abbott of being financially illiterate - you're recovering from a $70 billion mistake in costings. The polls today: "Who can run the economy best?" 34 per cent Wayne Swan, 33 per cent Joe Hockey. I mean, in terms of the public, this is a major issue now. Who has the economic credibility?

ARTHUR SINODINOS: I believe if you ask the public who has handled the economy well and has the capacity to do so again, I think the Coalition overwhelmingly has those credentials. One of the reasons the Government is in the shape it's in, is because there is a perception in the community that they went too far during the global financial crisis, they spent too much, there are too many stories of government waste in the building education revolution, the pink batts and the rest of it, which overwhelmed any impact of the stimulus on the economy. So, I think Wayne Swan has had to battle this perception for a long time, and I think he's still battling it.

TICKY FULLERTON: There are some heavy hitters on the Coalition side - most particularly yourself and Malcolm Turnbull. I think business are feeling, when are you two going to be taking up the economic heavy lifting, if you like?

ARTHUR SINODINOS: In my own case, I've only just joined the Parliament. I'm a member of Joe's razor gang and working as Chairman of the Deregulation Task Force so I've got plenty to do. Malcolm is a shadow minister, and he also, as a former leader has a prerogative and a capacity to talk on broader matters. I think we're all doing heavy lifting where we can, but as part of a team and we're trying to be as united as we can in the face of a government which has been pretty disunited.

TICKY FULLERTON: Senator, can I ask you one specifically on the Sydney airport. You are pro-growth - that must mean you're for a second airport somewhere in Sydney. There's been an $8 million report which recommends Badgerys Creek for a tonne of good reasons as the best place to go. Where do you sit on this?

ARTHUR SINODINOS: Let me preface that by saying, the fate of Sydney Airport, having another airport in the Sydney basin, is a national infrastructure issue, and it's appropriate the Federal Government take action on that subject.

TICKY FULLERTON: You support that?

ARTHUR SINODINOS: I support a second Sydney Airport. The question of where you put that and all the rest of it - we have a report, as you said, it talks about Wilton. I think that needs further examination. I think there has to be a deal between the Federal Government and the State Government, because the State Government is strapped for cash. Wilton, as I understand it, is owned by...

TICKY FULLERTON: And you think the State Government might come to the party if there was cash from the Federal Government's part of the deal?

ARTHUR SINODINOS: Whatever Barry O'Farrell may say about promises made during the last election, the fact of the matter is that he hasn't been offered anything like an attractive deal by the Federal Government to come to the table and even discuss the matter, and Barry has a number of infrastructure priorities in NSW where he could really use the money.